CBO cuts Obamacare cost views and says program reduces deficits

By Russ Britt

The expenses involved subsidizing health coverage for lower-income households under Obamacare won’t be as pricey as expected, and the overall net effect of the Affordable Care Act will be to reduce deficits, the Congressional Budget Office said Monday.

In a follow-up report to its February report, the CBO said it expects coverage provisions of Obamacare to cost $36 billion for fiscal 2014, $5 billion less than previously expected. For the years 2015 to 2024, the CBO said it expects the program to cost a cumulative $1.383 trillion, $104 billion less than expected.

Shutterstock

The 2014 costs revolve mostly around providing subsidies for health coverage through public insurance exchanges. In later years, there will be additional costs in expanding the Children’s Health Insurance Program and tax credits for small employers.

CBO officials stressed in this report that while it takes into account $456 billion in offsetting tax collections resulting from Obamacare’s implementation, there are other revenue-producing aspects of the program it did not include in this report. CBO says it estimated in July 2012 that, overall, Obamacare would reduce deficits.

The latest estimates differ from the February findings because, the CBO says, they were able to take into account the agency’s economic forecasts that were published after the earlier Obamacare report. These new estimates also include the effects of exchange premiums and pricing plans, revised estimates on the number of early retirees that have their own employment-based coverage under Obamacare, and take into account new ACA regulations put in place in recent months.

The CBO, along with the Joint Committee on Taxation, estimate that the percentage of the non-elderly population with health insurance will rise to 84% this year from 80%. That number will climb to roughly 89% by 2016, the agencies say.

That translates to 19 million more insured in 2015, 25 million in 2016 and 26 million in 2017 through 2024.

Story Conversation

About Health Exchange

Health Exchange guides investors to the crucial market intelligence they need to keep up with the health care industry, which makes up one-sixth of the U.S. economy. Anchored by Russ Britt, Health Exchange is the essential site for those looking for the most important news, data and analysis on the sector. You can reach Russ at Rbritt@marketwatch.com.